India’s GDP likely grew 5-5.1% in third quarter of FY23: Analysts

The economy likely grew by 5-5.1 percent in the October-December quarter of 2022 due to normal base, which is much lower than the 6.3 percent growth recorded in the previous quarter, according to analysts.

Normal base refers to the corresponding figure for the corresponding period of the previous fiscal year. But the base is lowered for calculating the growth rate when the previous figures are not comparable due to certain extreme conditions.

Compared to the pre-Covid figure, GDP likely grew by 11.6 percent in the third quarter from 7.6 percent in the previous quarter, said Aditi Nayar, chief economist and head of research at Icra, supported by a continued recovery in the services sector. Ratings.

On the other hand, Rahul Pajoria, head of British brokerage firm Barclays India, said the economy would have grown at a low pace of 5 percent in the October-December quarter of FY23.

The government is expected to release macroeconomic data for the third quarter on February 28. The government expects the economy to close the current fiscal year with growth of 7 percent or higher.

“Economic activity in the third quarter remained distinctly mixed, amid gains provided by strong demand for connection-intensive services and upbeat holiday season sentiment. Trends in government spending were mixed, with healthy revenue spending by the center amid an underlying contraction led by the impact in capital spending.

“Similarly, while services exports jumped 25 percent, non-oil merchandise exports contracted 8.2 percent in the quarter. Advance estimates for Kharif production, too, point to a mixed trend in crop production, with rises in sugarcane, cotton and coarse. Nayyar said. Cereals, oilseeds, rice and pulses are declining Amid continued input price pressures for certain sectors, we expect GDP to grow by 5.1 percent in the third quarter.

The rise in gross value added at basic prices is likely to have eased to 4.9 percent in the third quarter from 5.6 percent in the second quarter. It said that while growth in services would show moderation driven by the base effect (to 7.4 percent from 9.3 percent, respectively), it would outpace the rise in agriculture, forestry and fishing (4 percent) and industry at 1 percent. .

On a normalization basis, 12 of the 14 service sector high-frequency indices likely performed worse in the third quarter than in the second quarter, even as some contact-intensive sectors even closed above pre-pandemic levels in the third quarter.

Total revenue expenditure growth in 22 states eased to 5.4 percent in the third quarter from 15.9 percent in the second quarter. However, as a result of higher subsidies, particularly for fertilizers, non-interest revenue spending for the center expanded by 13.4 percent in the third quarter after contracting by 1.4 percent in the second quarter. All in all, the agency expects growth in GVA (gross value added) for the services sector to be 7.4% in the third quarter.

Investment activity was buoyant in the third quarter with several investment-related indicators performing better than in the second quarter, such as the output of capital goods (8.8 percent from 6.9 percent), infrastructure/construction goods (7.3 percent from 5.3 percent), and the value of new project announcements. (Up to a three quarter high of Rs 6.6 crore in the third quarter from Rs 4.4 crore in the second quarter).

Meanwhile, Barclays India President Bajoria said in a report that the GDP is likely to grow by 5 percent in the third quarter on an annual basis, but on a sequential basis, the GDP is likely to grow faster than the second quarter as the Many sectors, especially high-contact services, are moving towards a full reopening.

He added, “Our expectations for growth of 5 percent refer to full calendar year growth of 6.9 percent, and fiscal year growth of 7 percent, as high-frequency indicators look very strong in the first quarter of 2023 / the fourth quarter of fiscal year 23,” adding Domestically, the economy continues to perform well in key services and agriculture sectors, while manufacturing remains the only area of ​​significant weakness.

“For FY24, we continue to expect a soft landing as tighter monetary conditions and higher inflation take their toll. We continue to see moderate growth to 6 percent and expect steady GDP growth of 6.5 percent in FY25,” Baguria said.